(Alliance News) - Stocks in London are seen opening slightly lower on Thursday amid fears over China's faltering economic recovery, as investors eye Friday's US jobs report.
In early company news, housebuilder Barratt Developments reported a rise in annual profit, buoyed by the strong UK housing market. Athetic apparel retailer JD Sports Fashion lamented the UK competition regulator's decision to stifle its Footasylum acquisition. Industrial turnaround specialist Melrose Industries reinstated its dividend.
IG futures indicate the FTSE 100 index is to open 9.34 points lower at 7,140.50. The blue-chip index closed up 30.14 points, or 0.4%, at 7,149.84 Wednesday.
Barratt Developments said financial 2021 was a year in which the housebuilder made "excellent progress" and that it started the new financial year in a strong position.
For the financial year ended June 30, revenue rose 41% to GBP4.81 billion from GBP3.42 billion a year ago and pretax profit was GBP812.2 million, up 65% from GBP491.8 million. The pretax profit figure was at the top end of the company compiled consensus range of GBP761 million to GBP812 million.
During the period, Barratt completed 17,243 homes, up 37% from 12,604 completed last year and was in line with guidance given in July.
Barratt declared a total dividend of 29.4 pence, having paid out nothing the year before.
Turning to current trading, Barratt said its sales performance so far has been strong with forward sales as at August 22 of 15,734 homes, up from 15,660 homes at the same time last year.
"Our business is in a strong position with substantial net cash, a well-capitalised balance sheet and a strong forward sales position. We continue to deliver operational improvements throughout our business alongside high quality, sustainable homes and developments across the country. However, we recognise that the UK economy continues to face uncertainties arising from Covid-19," said Chair John Allan.
"We remain focused on our medium term targets. The board will continue to respond to changes in the market and the wider economy but believes that our operating performance, strong forward order book and further strengthened financial position provide us with the resilience and flexibility to react to changes in the operating environment in FY22 and beyond," Allan added.
Melrose Industries said it was trading ahead of expectations, with better profit margins and scope on its balance sheet to return more cash to shareholders next year.
For the six months to June 30, revenue rose to GBP3.54 billion from GBP3.39 billion last year and its pretax loss narrowed to GBP256 million from GBP720 million.
Melrose declared an interim dividend of 0.75p per share, having skipped its payout last year. It did recently, however, unveil a GBP730 million return to shareholders after completing the sale of its Nortek Air Management division.
Melrose said the global pandemic has continued now for over a year and, while it was yet free from the effects, its businesses are progressing well on their recovery. Further, it said its GKN Automotive and GKN Powder Metallurgy units are not immune from the global semi-conductor shortage. Encouragingly, it said GKN Aerospace is making steady progress and it has continued to invest heavily in technology and is taking the necessary actions to reshape the business.
Chair Justin Dowley said: "We are continuing to see recovery in all our businesses with trading ahead of expectations. Encouragingly, our Aerospace business is now weighted towards the expected narrowbody recovery. Our Automotive and Powder Metallurgy businesses are poised for strong growth as soon as the well publicised chip shortage abates and the progression in margins is ahead of plan with more to come.
"As with all its promises, Melrose has delivered its acquisition funding commitment to GKN pensioners early. We have scope on our balance sheet to return more money to shareholders next year and we are excited by the upcoming possibilities."
JD Sports Fashion noted the UK Competition & Markets Authority's announcement that the regulator has again provisionally prohibited the sportswear retailer's acquisition of peer Footasylum.
The CMA found the takeover could lead to a worse deal for shoppers after reassessing the merger.
JD said that it, nevertheless, remains committed to its transaction goal of improving Footasylum's resources, access to product and differentiated customer offering.
Chair Peter Cowgill said: "If the CMA's mission is indeed to 'make markets work well in the interests of consumers, businesses and the economy' then I urge the CMA to reconsider its position before making its final determination. This transaction will simply not 'lessen' competition, let alone 'substantially'.
"On the contrary, clearance would enable JD to invest in Footasylum and work with its management team to increase the quality, range and choice of products available to its consumers which will bring wider benefits to a UK High Street decimated by a number of high-profile closures."
The Japanese Nikkei 225 index closed up 0.3%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng index in Hong Kong was down 0.1%. The S&P/ASX 200 in Sydney ended 0.6% lower.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.1%, S&P 500 flat and Nasdaq Composite up 0.3%.
On Wednesday, weak ADP private hiring data along with solid growth in manufacturing that was held back by difficulty finding workers were key factors for investors awaiting the Labor Department's jobs report for August due Friday.
US stocks have posted steady gains and a series of records for months as the economy has roared back from the worst of the pandemic shutdowns.
But the Delta variant of Covid-19 has hit manufacturing in China, which economists fear will be echoed in the US.
"European markets got off to a mixed start to September, as investors digested a raft of underwhelming economic data, from China to the US, and looks set for a similarly mixed open today. The latest PMI numbers from China this week have been particularly disappointing, as concerns grow that the slowdown there is starting to get more entrenched," said CMC Markets analyst Michael Hewson.
The pound was quoted at USD1.3774 early Thursday, down from USD1.3786 at the London equities close Wednesday.
The euro was priced at USD1.1840, down from USD1.1858. Against the yen, the dollar was trading at JPY110.00, marginally lower from JPY110.04.
Brent oil was quoted at USD71.32 a barrel Thursday morning, up from USD70.76 late Wednesday. Gold was trading at USD1,813.23 an ounce, flat from USD1,812.84.
The world's leading oil producers on Wednesday upheld a deal reached just over a month ago to boost output gradually despite US pressure to go further.
After weeks of wrangling, members of the Organization of Petroleum Exporting Countries along with allies such as Russia, known collectively as OPEC+, agreed in July to raise output by 400,000 barrels per day from August.
The move is aimed at supporting a global economic recovery, which has been battered by the coronavirus pandemic - a crisis that sent oil demand plummeting last year.
Thursday's economic calendar has eurozone producer prices at 1000 BST before the latest US jobless claims data at 1330 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
Barratt Developments (BDEV)
Melrose (MRO)
JD Sports (JD.)